Wind Energy Potential - in Mexico's Northern Border States May 2012
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RE-Energizing the Border: Renewable Energy, Green Jobs and Border Infrastructure Project
Wind Energy Potential
in Mexico’s Northern Border States
May 2012
Duncan Wood
Department of International Affairs,
Instituto Tecnológico Autónomo de México
Senior Advisor, Mexico Institute Renewable Energy Initiative
Samantha Lozano Medecigo
Department of International Affairs,
Instituto Tecnológico Autónomo de México
Omar Romero-Hernandez
Center for Responsible Business,
Haas School of Business, University of California, Berkeley
Sergio Romero-Hernandez
Department of Industrial Engineering and Operations,
Instituto Tecnológico Autónomo de México
Contact details: Duncan.wood@itam.mx Mexico Institute
Mexico Institute This report is part of a series of four papers that explore the potential of renewable energy projects in the U.S.-Mexico border region. The project was made possible by generous support from the Council of State Governments-WEST and USAID. The writing of this report also owes much to the support given to a number of the authors by the Asociación Mexicana de Cultura A.C. and the Instituto Tecnológico Autónomo de México. The Mexico Institute and the authors are grateful for the support of these organizations, but neither they nor the Woodrow Wilson Center are responsible for the content, views, or data contained in the reports, which exclusively represent the views of their authors. The authors would like to thank Chris Wilson, Miguel Salgado and Estefania Ortiz for their support and assistance during this project. We acknowledge the faith put in us by Andrew Selee. Thanks are also due to Diana Murray Watts for her assistance in editing the reports. May 2012 Mexico Institute Woodrow Wilson International Center for Scholars one Woodrow Wilson Plaza 1300 Pennsylvania Avenue NW Washington, DC 20004-3027 www.wilsoncenter.org/mexico
Wind Energy Potential in Mexico’s Northern Border States
Wind energy on the border — a model for
maximum benefit
Duncan Wood, Samantha Lozano, Omar Romero & Sergio Romero
Introduction (the Programa de Obras e Inversiones del
Since the early 1990s, Mexico’s wind Sector Eléctrico or POISE), which posits
energy sector has gone through a dramatic the construction of as much as 1,500
transformation. From a few experimental megawatts of wind power for public service.
wind energy projects designed to either All of these developments place Mexico
show the potential for electricity generation firmly in the forefront of wind generation
or to provide very small-scale production in Latin America (although at the moment
for off-grid communities, by 2012 large- it is second to Brazil in terms of installed
scale generation projects were either in capacity), and wind power has been seen by
development or operation in a number of both the government and the private sector
states in the country, with over 1,000 MW as a lucrative economic sector.
installed capacity throughout the country Most electricity experts are familiar
and a further 2,000 MW in construction. with wind energy projects that have been
The change in the wind energy sector developed in the southern state of Oaxaca.
since 2006 has been remarkable, with a more There, the wind currents that cross the
than 600% rise in installed capacity during the Isthmus of Tehuantepec were mapped
presidential mandate of Felipe Calderón. 2012 in the 1990s and 2000s (with financial
witnessed Mexican installed wind capacity and technical assistance from USAID),
exceeding 1,000 MW for the first time, and encouraging the private sector to invest in
it is predicted that in 2012 alone, according the construction of wind farms that generate
to Secretary of Energy Jordy Herrera, around electricity for sale to private clients or to the
650 MW of capacity are due to come online, CFE. The development of the wind industry
with four Oaxacan projects (La Venta III and in Oaxaca began in the 1990s but is only
Oaxaca I, II, III & IV) leading the way. now approaching its real potential. By the
In addition to the development of wind end of 2012, wind-based installed capacity
parks in Oaxaca, the Comisión Reguladora in the state will reach around 1,500 MW.
de Energía (CRE) has issued permits for This is only a small percentage, however,
wind plants in Baja California, Tamaulipas, of the nation’s potential in wind energy. A
Nuevo León, San Luis Potosí, Veracruz, recent Mexican government study estimated
and Chiapas, bringing the total number of that around 71 thousand megawatts of wind
wind power generation permits issued to 30 energy could be produced nation-wide,
across the country. exceeding current national demand by 40%.1
The Mexican Federal Electricity Although the Oaxacan experience has
Commission (Comisión Federal de been highly successful in terms of rapidly
Electricidad or CFE) has published its developing the resource, it has become
strategic infrastructure investment plan a source of significant criticism on the
1
RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
grounds of unfair and unequal treatment wind to maximize benefits for government,
of local landholders, a failure to share business and society.
benefits with the local communities, and Our analysis focuses on three main
for causing social conflict. For example, axes. First, we examine the potential for
wind companies typically share only 1% creating economic benefits in border states
of their profits with local communities from wind energy development, with
in Oaxaca, compared with around 5% in particular attention paid to employment
developed countries. Increasingly, Oaxaca and infrastructure. Second, we examine the
is seen as a textbook case for how not to potential for the creation of clusters and the
develop wind power in politically and development of human capital. Last, we look
socially fragile areas. at the implications for social participation
This paper evaluates the potential and the distribution of benefits.
for developing wind power on Mexico’s
northern border, and in so doing examines
ways to avoid such mistakes as have plagued How wind
the Oaxacan wind sector. The paper looks at generates jobs
the prospects for wind energy development The wind energy sector has led the recent
across the border region, with a particular worldwide revolution in renewable energies.
emphasis on the states of Baja California With massive investment in the sector
and Tamaulipas, and argues that a model is in China, the United States and Europe,
emerging whereby wind power generation global installed capacity in wind energy
involves both public and private sector has grown from just over 24,000 MW in
partners who are harnessing the potential of 2001 to 239,000 MW by the end of 2011, an
Figure 1: Distribution of job creation from wind energy
1% .3%
.7%
3%
9%
■ Wind turbines manufacturing (37%)
11% 37% ■ Component manufacturing (22%)
■ Wind farm development (16%)
■ Installation, operation and maintenance (11%)
■ IPP/Utilities (9%)
■ Consultants (3%)
■ R&D Universities (1%)
16% ■ Financial (.3%)
■ Others (.7%)
22%
Source: EWEA, “Wind and Work: Wind Energy and Job Creation in the EU,” Euopean Wind Energy Association,
2009, http://www.ewea.org/fileadmin/ewea_documents/documents/publications/Wind_at_work_FINAL.pdf.
2
Wind Energy Potential in Mexico’s Northern Border States
almost ten-fold increase in a decade. In part, employment point to the creation of 6 jobs
this has been driven by fears over climate per year per MW of installed capacity in
change, but the most significant factors the manufacturing of turbines. This would
have been declining costs and the prospect suggest that well over a million job years have
of subsidies from governments anxious to been created worldwide by the wind boom,
promote the use of renewable energies. just in manufacturing. Another estimate
This prodigious rise in installed capacity of the importance of wind energy, from the
in wind has created benefits beyond just European Wind Energy Association, also
reduction in greenhouse gas emissions. highlights the importance of the turbine
Wind power has been hailed as a major manufacturing industry in wind energy job
source of so-called “green jobs,” and has been creation, but goes further and shows the full
credited with creating more jobs per unit of distribution of employment in the sector.
energy than traditional hydrocarbon-based Component manufacturing is the second
electricity generation industries. Employment highest factor in job creation, suggesting that
is created not only in the construction, societies can derive long-term employment
operation and management of wind facilities, benefits from wind, far beyond the initial
but, more importantly, in the manufacturing phase of construction.
of wind turbines. All of the world’s major
wind markets have been attracted by
the prospect of this kind of employment Wind energy in Mexico
creation, as manufacturing jobs are seen During the administration of President
as being high quality, well-paid positions. Felipe Calderón, the installed capacity of
Estimates of the importance of wind sector wind power in Mexico has expanded by
Figure 2: Installed wind capacity in Mexico
1000
800
Capacity (MW)
600
400
200
0
2004 2005 2006 2007 2008 2009 2010 2011
Source: The Wind Power: wind turbines and wind farms database, http://www.thewindpower.net/country_
en_36_mexico.php.
3
RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
over 600%. As noted above, the growth Servicio Público de Energía Eléctrica (LSPEE)
of the wind sector during the Calderón is generally seen as being the most important
administration reflects the high quality of factor in driving private participation in
the resource as well as the interest of the Mexico’s electricity system, and in facilitating
private sector to invest in renewable energy a greater role for wind energy in the nation’s
sources. But it has also been made possible energy matrix. Under the LSPEE, the CFE’s
thanks to the existence of a legal framework Constitutional monopoly on electricity
that has encouraged the private sector to generation for public service is interpreted to
become involved in electricity generation, exclude five areas:
traditionally an area reserved for the state
in Mexico. ■■ Electricity generation for self-supply
Under the Mexican Constitution, the State purposes, cogeneration or small
has exclusivity over generation, transmission, scale production (Wind Energy Potential in Mexico’s Northern Border States
Table 1). Between 1992 and 1997, installed established the dominance of the state
electricity generation capacity in the hands in the electricity sector, the LAERFTE
of private enterprise more than doubled promoted the use of renewable energies in
from 3,380 MW to 6,902 MW. Mexico through two main initiatives:
The LSPEE authorizes co-generation for
private companies with authorization for ■■ A National Strategy for the Energy
connection to the national grid coming from Transition and Sustainable Use
the Comisión Reguladora de Energía (CRE). of Energy (Estrategia Nacional
The regulation considers various modalities para la Transición Energética y el
in this regard: Aprovechamiento Sustentable de la
Energía), which aims at improving
■■ Interconnection contracts energy efficiency and diversifying
for intermittent renewable the energy matrix; and,
energy sources (CIEI) ■■ The Special Program for the Use
■■ Interconnection contracts for of Renewable Energy (El Programa
small-scale solar projects Especial para el Aprovechamiento
■■ Interconnection contracts for de las Energias Renovables), which
self-supply arrangements for aims to produce new public policies
governmental entities in the areas and to provide means to
■■ Purchasing contracts for small promote renewables.
producers (CCPP)
■■ Purchasing agreements for Within this package of policies was
electricity surpluses the creation of a new fund for the energy
transition, the Fondo para la Transición
Transmission service Energética y el Aprovechamiento
agreements Sustentable de la Energía. Comprised of
Self-supply contracts involving local an annual total of 3 billion pesos, this fund
and state governments are given a lower attracted enormous interest when it was
transmission charge for energy from first announced. However, the Federal
renewable, rather than traditional, sources. Government has used the fund for energy
This helps to greatly improve the economics savings and energy efficiency programs
of self-supply for municipalities and state- rather than promoting renewable energy
level governments in particular. use, and has failed to meet its annual
Of more direct relevance to renewable contribution since 2010.
energies, Mexico implemented the In terms of economic incentives or
Proyecto de Energías Renovables a Gran subsidies for renewable energy development,
Escala (PERGE) in 2007, which provided Mexico lags far behind European countries
limited economic incentives for renewable or the United States. However, thanks to a
energy projects over 100 MW. Mexico modification of the tax laws made in 2004,
further improved the legal environment companies that invest in renewable energies
for renewable energy with the 2008 Ley can deduct up to 100% of the money spent
para el Aprovechamiento de las Energías on machinery and equipment during the
Renovables y el Financiamiento de la first year of operation. The law stipulates
Transición Energética (LAERFTE). Despite that the project remains in operation for at
the fact that this new law once again least five years.
5RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
These legislative developments, ■■ Baja California Sur
however, were not solely responsible for ■■ Quintana Roo and Yucatán
the rise in wind energy capacity. Instead, it
was the conjunction of several factors that As should be obvious from this list,
brought about Mexico’s wind boom in the there was a clear focus on the potential
2000s: improved technologies, falling costs, of northern Mexican border states in the
increased interest in renewable energies new mapping exercise. This reflected the
due to rising awareness of climate change growing awareness in the United States
as well as financing opportunities through (and, to a lesser extent, in Mexico) that
international carbon credit schemes, there was an emerging market for exporting
and most importantly the mapping of wind power to the Californian electricity
Mexico’s wind patterns in key areas of market as that state moved toward a
the country, such as Oaxaca. The 1995 renewable portfolio standard (RPS),
Mexico Wind Resource Mapping Project, requiring a minimum level of renewables in
undertaken by the United States’ National the state’s electricity mix. The importance
Renewable Energy Laboratory (NREL), led of this development has been discussed at
to a deeper and more detailed evaluation length elsewhere, most recently in another
of the resource in 2002, in which USAID, Wilson Center publication.2
NREL and a collection of U.S. and Mexican What is also clear, however, from a
partners participated. Mexican government map showing areas
The resulting 135-page Wind Energy with wind energy potential in the country,
Resource Atlas of Oaxaca proved to be is that the areas that have thus far been
the trigger for major interest in Oaxacan examined and evaluated constitute a tiny
wind. As large private consumers, such percentage of the total. Mexico has a
as WalMart, Bimbo, Cemex and Grupo truly world-class wind resource and holds
Bal began to recognize both the cost the prospect of significant expansion of
advantages and environmental benefits of capacity throughout the country if the right
taking out self-supply contracts for wind conditions are met.
power, investment flooded into the sector, Before moving on to focus on the
led by foreign firms such as Gamesa and question of transmission, it is worth
Acciona. In 2007, the Mexican government emphasizing the problems that have come
set a target of 2,500 MW of installed wind out of the development of wind projects
capacity by the end of 2012, a target that is in Oaxaca. In 2009 USAID published a
now likely to be met by the end of 2013. report titled “Elementos para la Promoción
Interest in Mexican wind did not de la Energía Eólica en México,” which
just stay in the southwest of the country. focused heavily on Oaxaca but also covered
Working again with its partner NREL, northern Baja California and the southeast
USAID has funded mapping of the wind of the country.3 The report recognized the
resource in a number of states: continuing obstacles to the development of
the wind industry in Mexico, emphasizing
■■ Baja California Norte Border Region transmission, the lack of incentives or
■■ Western Chihuahua Border Region subsidies and social and environmental
■■ Northwestern Mexico Border Areas factors. The social dimension is of particular
■■ Eastern Sonora Border Region importance here. Between 2007 and 2010,
■■ Western Sonora Border Region more than 180 lawsuits have been filed in
6Wind Energy Potential in Mexico’s Northern Border States
Map 1: Areas with potential for wind energy generation in Mexico
Red areas are actual plants. Blue areas have potential for development.
Source: Secretaria de Energía website, http://sener.gob.mx/webSener/res/1803/Eolico.pdf.
Oaxaca against wind energy companies, Transmission:
seeking to nullify contracts that are seen as the crucial element
unfair.4 In one high profile case involving Around the world, the development of
the EURUS consortium, the construction the wind energy sector has depended on
of the wind farm was held up when 170 the availability and close proximity of
campesinos blocked the entrance to the transmission lines. Unlike conventional
site, demanding a three hundred percent sources of generating electricity, which can
increase in the payments made by the be located close to population centers and
wind company. The 2009 USAID report existing transmission lines, wind (as well
recommended broadening the policy as solar and geothermal) plants must have
process to incorporate civil society and transmission lines built to allow them to get
universities in a more comprehensive their electrons to market.
fashion. Furthermore, it insisted on the need Surveys of wind producers around
to address the concerns of local landowners the world have shown that development is
relating to land use and compensation. hindered more by transmission challenges
7RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
than any other single factor. In Mexico this across the border. Furthermore, only 5 of
problem is made more severe by the fact these connections are bi-directional. In
that the CFE has a constitutional monopoly Baja California, the Miguel-Tijuana and the
over transmission and therefore there are Imperial Valley-Rosarita interconnections
no other outlets for wind Independent (both 230kV AC) have a combined capacity
Power Producers (IPPs) if CFE refuses of 800 MW, in Coahuila the Eagle Pass-
to provide capacity. Moreover, CFE is Piedras Negras interconnection (138kV
prohibited from using public funds to build HVDC) has a capacity of only 38 MW, and in
new transmission capacity if the energy Tamaulipas the Laredo-Nuevo Laredo (138kV
generators cannot prove that they are VFT) and McAllen-Reynosa (138kV HVDC)
willing and ready to pay for the electrictity interconnections have a combined capacity of
transmission service. On the other hand, 250 MW. These interconnections are maxed
many electricity generators who want out and therefore cannot be considered
to build plants cannot get the financing for future cross-border electricity trade. In
they need unless they can prove that addition to these lines operated by CFE, there
transmission capacity will exist by the time are two privately owned transmission lines of
they come online. 310 MW (owned by Intergen) and 1200 MW
In the case of Oaxaca, this problem has (owned by Sempra).
been resolved through close cooperation The problem of cross-border
between IPPs, the CFE and the CRE, which transmission has been identified in a number
have developed an effective method of of previous reports on wind and renewable
estimating future transmission demand energy in Mexico,5 and in 2010 the two
through the use of open seasons. In an countries set up a task-force to address
open season system, a period of time is the issue.6 Although this group has met a
determined (often one year) during which number of times, there appears to be little
electricity companies can indicate their momentum behind the initiative, with each
intention to build new plants and their need side blaming the other for lack of progress.
for transmission capacity. At the end of this
time, the transmission authority (in this Wind at the border
case the CFE) uses the results to justify its Since the mid-2000s, the governments of
investment in constructing new lines. northern Mexican border states have begun
For the state of Baja California, this to develop an awareness of the potential
problem is made even more acute because for wind energy development in the region.
there is no interconnection between This has been driven by a number of factors.
the state and the national grid, making First, the high level of investment in wind
export of electricity to private consumers energy projects in Oaxaca has demonstrated
in other states impossible at the present to governments that the sector is a source of
time. Mexico’s national grid is in fact three considerable wealth and economic benefits.
grids, with Baja California Norte and Second, the growing awareness and detailed
Baja California Sur each having their own knowledge of the potential for wind energy
independent system. in the northern states has shown them
A further level of difficulty is found that they have a resource that has thus far
with cross-border transmission. A quick remained untapped. Third, developments
survey of the above map shows that there are at the national level in terms of energy
only a limited number of interconnections planning and the emphasis by the Calderón
8Wind Energy Potential in Mexico’s Northern Border States
Figure 3: Barriers to renewable energy development
Source: USAID, “Estudio del Potencial de Exportación de Energía Eólica de México a los Estados Unidos,” 2009.
Map 2: Mexico’s national grids
Blue: 400 kV, Orange: 230 kV, Red: 116 kV, Green: 161 kV, 138 kV, and 34.6 kV
Source: CFE, www.cfe.gob.mx.
9RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
administration on climate change and country. The north of the country offers an
the question of mitigation have raised an intriguing prospect for two reasons: first,
awareness of the environmental benefits of the geographic proximity to the United
renewable energy. States, and second, its proximity to areas
The northern states, as other studies that have traditionally been seen as the
in this project have shown, are particularly industrial heartland of Mexico. Both
well-endowed when it comes to renewable of these factors offer the potential
energy, and wind is no exception. Of the for customers for electricity produced
six border states, there are exploitable wind from wind.
resources in Baja California, Chihuahua, One last point that merits mention here
Nuevo León and Tamaulipas. The first is that the border states show not only some
and the last of these stand out, with huge of the highest economic growth rates in the
potential in the mountainous regions of the country, but also the highest rates of growth
Sierra Juárez in Baja California, and in the of carbon gas emissions. A recent study by
coastal and inland plains of Tamaulipas. the BECC/COCEF (Border Environment
Graphic 1 shows this clearly. Although Cooperation Commission/Comisión de
Oaxaca has been the first beneficiary of Cooperación Ecológica Fronteriza) showed
the wind boom in Mexico, the future that the border states show a steady rise in
development of the sector will likely be emissions and are responsible for 25% of
in the northwest and northeast of the national emissions.
Figure 4: Carbon gas emissions in Mexican border states (BECC/COCEF study)
250
Total by 2025=225.7 MTMCO2e
■ TM
■ NL
■ CO
200
■ CH
■ SO
■ BC
MMtCO2e
150
100
50
0
1990 1995 2000 2005 2010 2015 2020 2025
Source: BECC/COCEF, “Emisiones de gases de efecto invernadero en los seis estados fronterizos y proyecciones
de casos de referencia 1990–2025,” http://www.becc.org/espanol/index.html.
10Wind Energy Potential in Mexico’s Northern Border States
Chihuahua: of the wind boom in the United States
NREL produced its first wind map of the by attracting investment into the wind
state in 2004, which highlighted a number turbine manufacturing sector. Vientek,
of areas showing potential for wind energy a joint venture between TPI Composites
development. However, it is only since Inc. and Mitsubishi Power Systems (MPS),
2008 that the private sector has begun to manufactures blades for wind power units
show interest in the resource. The area at its assembly plant in Ciudad Juárez.
surrounding the city of Cuauhtémoc, From there it ships blades for the North
110km to the west of Ciudad Chihuahua, American and Japanese markets. The
has been identified as a potential site for plant opened in 2002 and has been highly
wind farm development by the state and has successful. In 2007, a second plant was
attracted interest from Spanish, American opened in the city. The firm now employs
and Korean firms. The potential at the site is 900 people in the two plants and continues
considerable, and the Chihuahua Ministry to experience high levels of demand
of Communications and Public Works as MPS has increased its wind turbine
announced that the state was recently in manufacturing to 1200 MW/year.
talks with a firm to install 10 MW of wind
turbine capacity to generate electricity Coahuila:
for public lighting. The rate at which the Although the state of Coahuila has
electricity would be sold to the municipality
no working wind energy projects, like
would be lower than that charged by the
Chihuahua it has benefited from the wind
CFE, and excess electricity would be sold to
energy boom in the form of manufacturing
the public utility.7
jobs. In November 2009, Speco Wind
At the same time, the Spanish
Power, a Korean producer of towers for
company Preneal Energías Alternativas
wind turbines, opened a plant in the city
has been exploring the possibilities of
of Monclova, employing 450 people, with
developing the wind resource in the
plans to double that number in following
desert of Samalayuca, where it has signed
years. The investment totaled US$30
agreements with local landowners to rent
million. 8 Since 2009, however, the plant
6,000 hectares of land with an eye to
has diversified its manufacturing away
installing wind turbines. The long-term
from just wind towers to other heavy
goal is to install over 850 turbines that will
machinery, as demand has been slack for
ultimately have a total installed capacity
its product.
of over 2,000 MW. As part of the land
rental agreements, Preneal has committed
to sharing 1.5% of the profits from wind Nuevo León:
generation with the ejidatarios. It is worth The eastern area of Nuevo León shares the
noting that this is significantly less than same wind resource as Tamaulipas, and the
the norm in the United States and similar state government has begun to recognize
to the rate paid to Oaxacan land owners. the potential therein. As early as 2002, the
To date neither of these projects has private sector showed interest in the wind
been brought to fruition, and Chihuahua patterns in Santa Catarina and Guadalupe
lags behind states such as Baja California municipalities with the creation of Eólica
and Tamaulipas. However, the state has Santa Catarina. The venture includes the
been successful in taking advantage municipal authorities of Santa Catarina
11RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
and Guadalupe and the Mexican-U.S. firm announced that the government would
Energy and Water Service Multinational begin a program to drive the development
(ESM), which agreed to provide financing. of the wind sector in Nuevo León, hoping to
To date, this project has not been realized, install as many as 250 turbines in the next
but interest was revived in June 2011 with few years. Fernández Moreno predicted that
the announcement that the firm Next investments totaling over US$2 billion
Energy Mexico was preparing a $48 million would be required to bring this potential
investment to install eight 2.6 MW turbines to market.11
(for a total of 22MW capacity) in the Santa Nuevo León is particularly intriguing
Catarina area. The goal of this project because of the potential for cooperation
is to provide electricity to the municipal in wind energy between the government
authorities in Monterrey, Apodaca, and the industrial elites that dominate the
Santa Catarina, Escobedo, García and economy in the region. Major Mexican firms
Los Ramones.9 from Monterrey, such as Cemex, are already
In January 2011, the state government heavily invested in wind energy self-supply
announced the launch of a wind energy contracts from Oaxaca, and would be strong
atlas, El Atlas de Potencial Eólico de Nuevo promoters of the resource in the center of
León, which identified the areas with biggest Nuevo León.
potential for development and put the overall
potential of the state at around 11,000 MW. Tamaulipas:
The two areas with biggest potential in the As can be seen from the Mexican
state were identified as the municipalities government’s wind map, Tamaulipas
of Hidalgo and Linares.10 Based on this has enormous potential for wind power
study, the state’s director of sustainable development. However, it is only in recent
development, Fernando Gutiérrez Moreno, years that the state government has
Table 2: Wind energy projects in Tamaulipas
Los Vergeles, San Fernando El Porvenir wind park, Wind turnbine
(2012) Reynosa, (2013) manufacturing (Matamoros)
■■ 161 MW ■■ 54 MW, 156.4 GWh/yr. (72 ■■ CS Wind Corporation,
■■ Financing: US$ 328 million MW in 2nd stage) investing US $60 million in
■■ Eployment: 500 jobs in ■■ Financing: US $51 million production plant
construction phase (2 yrs) ■■ 15 yr self-supply contracts ■■ For export to the U.S. market
plus 60 permanent jobs ■■ According to the COCEF, El ■■ 700 new jobs in the next 4
■■ 25% reduction in GG Porvenir will reduce carbon yrs: skilled labor — engineers
■■ Low cost electricty for emissions by 0,976 metric and technicians
municipal authorities (5–10% tons of CO2 in first year
savings) — used for hospitals, ■■ 20 km of new roads will be
schools, public lighting, built to service the wind park
public buildings. ■■ Construction will begin
in March 2012, come into
operation in March 2013.
Source: Duncan Wood, “”Re-Energizing the Border,” presentation made to the Woodrow Wilson International
Center for Scholars, Washington, DC, December 14, 2011.
12Wind Energy Potential in Mexico’s Northern Border States
recognized this potential and has begun through 15 self-supply contracts to Soriana,
to encourage investment in wind capacity. a major Mexican supermarket chain.13
At present, the center of the state’s wind The third major wind-related
sector is to be found at Los Vergeles, a site development in the state involves the
in the municipality of San Fernando (a opening of a $60 million manufacturing
region notorious in recent years for high plant for towers and components for wind
levels of drug violence), but there is cause for turbines, run by the CS Wind Corporation.
optimism in other areas. Once again, as in both Chihuahua and
Three projects stand out in the state. Coahuila, these turbines are for export to the
The first, at Los Vergeles, involves the United States market, showing that Mexico
construction of a 70 turbine, 161 MW is benefitting from the wind energy boom in
wind facility that will provide electricity its northern neighbor while also highlighting
to 43 municipalities. The electricity will be the fact that Mexico has the capacity to
used to power public lighting, schools and produce turbines for its own national
hospitals.12 The savings for public authorities market. The plant in Matamoros will employ
will be substantial, and the sale of carbon up to 700 people as production increases.14
bonds will further lower the cost of the Beyond these existing projects, the
electricity. It is estimated that the wind farm government of the state has announced that
will employ 500 people for 2 years during there are now 40 projects and businesses
the construction phase and will provide 60 interested in investing in wind power in the
permanent jobs in the management and state. This claim is backed up by the recent
operation of the facility. Though the project success of the CRE’s Temporada abierta,
has been talked about for a number of years, or open season, for firms interested in
groundbreaking took place in November reserving transmission capacity from the
2010 and the first turbines are expected to CFE in Tamaulipas. The season, launched in
come online by the end of 2013. August of 2011, closed in March 2012 with
The second project of importance a total interest amounting to 1900 MW.
in Tamaulipas that is already in the Even if only a percentage of this interest
construction phase is a smaller wind park comes to fruition, the state’s electricity
in the north of the state, on the border with sector will be transformed.
the United States. Construction began at
the El Porvenir wind park in March 2012 Baja California:
on communal farmland known as Ejido wind working for
El Porvenir, just southeast of Reynosa, the community
Tamaulipas. 54 MW of turbine capacity Because Baja California has yet to be
will be installed. The facility is being run connected to the national electricity grid
by Mexican company Compañía Eólica (the CFE claims that the interconnection,
de Tamaulipas, S.A. de C.V. (CETSA), with a capacity of 300MW, will be completed
which received a peso loan equivalent to in 2014), the state has an intriguing history
US$51 million from the North American in terms of power generation. Geothermal
Development Bank (NADBank) and power has been used to produce electricity
the Border Environment Cooperation at the CFE’s Cerro Prieto plant for decades,
Commission (BECC). This is the first wind in sufficient quantities to make the state
facility financed by the NADBank in Mexico. independent in power generation and to
The electricity from the plant will be sold allow for exports to California.15 The long-
13RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
Table 3: Potential areas for electricity generation from wind in Baja California
Standard
Station Mean (knots) Mean m/s Energy (W * M2)
Deviation
La Puerta 11.5 6.2 2.5 238.2
La Rumorosa 14.9 8 4.0 516.4
El Centinela 17.2 9.3 4.9 793.7
El Hongo 12 6.5 2.6 274
El Pinal 11.7 6.3 2.9 254.7
Jacume 15.5 8.3 3.7 518.6
Pino Suárez 20.2 10.9 4.5 1299.6
Source: Centro de Investigación Científica y de Educación Superior de Ensenada. (2003), “Zonas Potencialmente
Productoras de Energía Eólica, en Baja California.” http://www.bajacalifornia.gob.mx/energia/estudios.html.
term importance of this renewable and clean a showcase of what could be possible for the
source of energy is that it has helped to shape rest of the state. At the time, wind power was
a way of thinking about energy policy (with still a novelty in the Mexican energy sector,
an emphasis on innovation and renewables) in and the Baja California government’s decision
the state that is unique in the country. was seen as a brave new departure. The
The history of wind energy in the state state’s energy commissioner, David Muñoz
of Baja California can be traced back to a Andrade, is now recognized throughout
study carried out in 2003 by the Centro Mexico as being a champion of wind energy,
de Investigación Científica y de Educación and his efforts were crucial in pushing
Superior de Ensenada (CICESE), titled forward the development. In order to attract
“Zonas potencialmente productoras de private investors into the region to build
energía eléctrica eólica en Baja California.” wind farms, the state energy commission
This study, based on information from took the initiative to build a small, 10 MW
meteorological stations across the state, wind project at La Rumorosa. The plant was
identified a number of locations as being designed to provide electricity for the city of
particularly well-suited for wind energy Mexicali’s public lighting needs.
development. Combined with the studies La Rumorosa is a small town in the
carried out by USAID and NREL, the municipality of Tecate, bordering the United
CICESE report provided a boost for wind States to the north, the municipalities of
promoters in Baja, and helped to alert the Mexicali and Ensenada to the east, Tijuana
state government to the potential. and Ensenada to the south, and Tijuana
In 2008, the BC government of Governor to the west. It has a semi-desert climate,
José Guadalupe Osuna Millán (2007–2013) mountainous and dry, wholly unfit for
decided to use the development of the farming. The town lies on the Sierra Juárez,
wind resource at La Rumorosa, only a few and the winds that gave the town its name
kilometers from the U.S.-Mexico border, as are very strong, to the point of making
14Wind Energy Potential in Mexico’s Northern Border States
it difficult to walk for long distances. La that the training received by the local
Rumorosa has a reputation as a place for the population will provide long-term benefits
middle classes of Mexicali to escape to in for the community. Of greater importance
the heat of the summer, but has few other is the fact that the employment of large
economic opportunities. numbers of local people, as well as the
The building of the La Rumorosa I wind creation of diverse business opportunities,
plant was undertaken in 2009, and involved helped to convert the local community into
a total investment of U.S. $26,191,715. The an important stakeholder in the project.
project had a strong local component, with This aspect of the project, of ensuring
the principal contractor and a number of that the local population accepted and
subcontractors from the areas of Mexicali, welcomed the building of the wind farm,
Tecate and Tijuana. The administration of was also assisted by a clear and open
the entire project was awarded to Turbo communication strategy on the part of the
Power Services, S.A. de C.V., a Mexicali- state government. By sharing data about
based firm. A total of 90% of the human the project, establishing a transparent
resources employed in the planning and procurement policy, and by involving the
construction phases of the project came from local community at every stage of the
the local area. The project employed 270 process, the project met with minimal
people directly over a six-month period in the resistance and is a source of local pride.
construction phase, including 7 engineers. One opportunity to create local
Furthermore, the local community benefitted economic benefits was missed, however. The
in other ways, with rising demand for services wind turbines that generate the electricity
(food, lodging, etc.) during the construction had to be imported from the United States
phase, as well as employment opportunities as Mexico did not have a viable option. Five
in local mechanical and welding workshops 2 MW Gamesa G87/2000 wind turbines
thanks to the maintenance needs of on-site (power 850 kW, diameter 52 m) were used
equipment. In total, we can estimate that in the project to produce a total installed
the project led to the creation of around capacity of 10 MW. As we have already
500 temporary jobs in the area. Three full- explained, the major employment benefits
time permanent jobs were created in the from wind power (in terms of permanent
management and running of the plant. In a jobs) are to be found in the manufacturing of
town the size of La Rumorosa (its population the turbines, and Mexico has thus far failed
is under 2,000 people), the temporary and to attract significant investment into this
permanent employment footprint has had a sector, thereby missing out on high-quality,
discernible impact on local welfare. permanent employment opportunities.
The use of local contractors and Nonetheless, the long term benefits of La
employees was a conscious decision of the Rumorosa I have been significant since the
state government and Turbo Power Services. construction was completed and the plant
A representative of the firm has stated that began generating electricity. The electricity
“the economic impact is much stronger, produced is transmitted to the city of
localized, and permanent in the locality, in Mexicali, where it is bought by the municipal
comparison with the use of subcontractors authority and used to power 80% of the public
and businesses located, or whose lighting in the city. Because of the low cost of
headquarters are located, in other regions of the electricity (thanks in part to the excellent
the country or abroad.”16 It is also claimed resource at La Rumorosa, and in part because
15RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
of the effective management of the project), Given the extreme temperatures in the
the Mexicali government is able to save summer months, local families face the
between 5–10% on what it would have had dilemma every year of whether to use their
to pay to CFE for the same electricity. These air conditioning system or to save the money
savings mean that the local authority, and for other necessities. The “Tu Energía”
therefore the tax payer, saves money, which program is a “smart subsidy” that helps
can then be used for other public services. 35,000 families to cover their costs without
The fees paid to the state government for sacrificing comfort in their homes. What’s
the provision of the service suffice to cover more, its focus on disadvantaged families is
the costs of generation and the financing of a highly progressive aspect that has attracted
the project, and still result in a surplus. This positive publicity for the program.
surplus is taken by the state government and
invested in a program called “Tu Energía.” Knowledge spillovers
In this program, local families in Mexicali In addition to the development of human
receive a subsidy on their electricity bills capital on-site at La Rumorosa, the
through deposits to a discount card which government of the state has a vision of
can be used to pay the CFE. 35,000 families building networks of expertise in wind
in the city were selected based upon income power at the local and state levels. The
levels and financial need. Approximately government plans to work alongside
one third of the beneficiaries are households universities and other institutes of higher
with a single mother, one third senior education to take advantage of the
citizens, and third persons with disabilities. wind farm at La Rumorosa to develop
Recipients are subject to a means test and undergraduate, graduate and diploma level
the subsidies are transferred to the discount courses on renewable energies. In 2010,
card in installments: in May of each year the the Universidad Tecnológica de Tijuana
amount deposited to the card is 100 pesos; (UTT) and the Universidad Politécnica
in June, 150 pesos; in July and August, de Baja California (UPBC) signed a
250 pesos; in September, 150 pesos; and collaboration agreement with the state
in October, 100 pesos. These subsidies can energy commission, aimed at exchanging
be accumulated and can be used to pay off knowledge and experience, promoting
earlier debts with the CFE. academic course offerings and conferences,
The logic behind the scheduling of the publishing of text books and other
these payments is that, during the summer didactic materials, and the financing of
months, electricity use in Mexicali rises research and training activities. Through this
dramatically due to the need for air agreement courses on renewable energy will
conditioning in homes. Because of the be jointly designed and taught, involving the
CFE’s pricing system, whereby low level exchange of teaching staff and researchers.
consumption is subsidized but higher levels A key component of these courses will be
of electricity use result in much higher costs practical experience for the students.
per unit of energy consumed, this higher In addition, in 2009 the Universidad
consumption in the summer months has Autónoma de Baja California (UABC)
traditionally resulted in a major financial announced the creation of a Center for
burden for low-income Mexicali families. Renewable Energy Research (CIER). This
There is a long history of social project seeks to bring together businesses,
discontent in Mexicali over electricity bills. government and universities to produce
16Wind Energy Potential in Mexico’s Northern Border States
applied research, technological development Energía Sierra Juárez, at La Rumorosa,
and innovation aimed at improving the to generate electricity for export to the
international competitiveness of Mexican United States. This plant will involve the
renewable energy firms. A central goal of the installation of 52 turbines, bringing further
CIER is to produce highly qualified human employment and income in the form of
resources and technology transfer for small rents for land use. Sempra has a 20-year
and medium-sized enterprises involved in agreement to provide Southern California
the renewable energy sector.17 Edison with up to 250 MW of wind power
In 2012, the government of Baja from La Rumorosa18 that is expected to
California also announced the creation of a generate enough energy to power 65,000
small training and public information center homes in California. The firm has long-term
at the site of La Rumorosa I. This facility plans to expand the capacity of its plant and
will allow university students to spend a has acquired access to almost half a million
day on-site and observe first-hand how a acres in the region (mainly through leasing
wind plant is managed. Technical data from arrangements), that will allow it to reach
the plant will be available for analysis, and a maximum capacity of 1,200 MW if the
students will be able to interact with staff at firm decides to fully develop the resource.19
the facility. Sempra will get the electricity to market via
It is hoped that the combination of a cross-border transmission line built by
these three initiatives, along with more the company that will connect with the San
that will come in the future, will lead to Diego grid.
the development of knowledge clusters The other major development that has
in renewable energies in the state. By been announced at La Rumorosa involves
encouraging collaboration between Mexico Wind Power, a subsidiary of Cannon
universities and the private sector, and Wind Power, a United States firm. Cannon
by offering the prospect of well-trained has announced that it will begin with a
graduates to satisfy the demand for skilled first phase of the project installing 72 MW
labor in the sector, the state hopes to build a capacity on 7.5sq km. However, the company
reputation as a renewable energy hub. has declared that it has the potential to
generate up to 1000 MW in the area. Thus
Further developments far, the firm has signed a series of 60-year
at La Rumorosa contracts with the local ejidos, guaranteeing
The other long term benefits of the La access to prime land.20 Interestingly, the
Rumorosa I project are to be found in its company has commented on the fact that
status as an example of what can be achieved it is much easier to deal with the ejidos in
through wind power. The Baja California Baja California than their counterparts in
government has consistently argued that Oaxaca, suggesting that the attention has
the success of the project will inspire been paid to the lessons of the Oaxacan
private investors to take the leap and build experience. It also suggests that the local
wind farms in the region that will result community has been convinced of the
in the generation of clean electricity, green benefits from wind energy through the
jobs, infrastructure and positive economic experience of the La Rumorosa I.
spillovers for the local community. Other companies that have registered
By 2011, Sempra had announced that it interest in the region include Fuerza Eólica
would build a 156 MW wind plant, named and Unión Fenosa, both of which have
17RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
received approval from the CRE to develop insufficient, as there is still the question
wind projects in La Rumorosa. It is estimated of how to move electrons generated at
that there is potential for up to 5,000 La Rumorosa to the existing grid in the
MW of installed capacity in the vicinity state. Sempra’s Energía Sierra Juárez has
of La Rumorosa alone, with even greater circumvented this issue by proposing to
possibilities for development throughout the build its own cross-border transmission
Sierra Juárez mountain range. line to connect with the California grid.
However, Cannon is currently struggling to
The transmission find off-takers for its electricity because the
obstacle transmission question within the state has
A major difference between the Cannon not been resolved.
and Sempra projects is that Cannon’s goal When the La Rumorosa I project was
is to produce wind power for domestic completed, the plant hooked into a small,
consumption within Mexico. The focus low-capacity local transmission line that
on self-supply contracts suggests that the runs beside the project. The line looks
prospect of Baja California’s interconnection alarmingly unstable and does not have the
with the rest of the Mexican grid will prove capacity to take anymore electrons. Also
a boon for wind power in the area. However, running near the project is a 230kv line that
the existence of a connection between the connects Mexicali and Tijuana, but CFE did
state and the rest of the country may prove not give permission to Turbo Power Services
Map 3: Transmission options for Sempra Energía Sierra Juárez project
Source: California Public Utilities Commission, “Overview of La Rumorosa Wind Options,” http://www.cpuc.
ca.gov/environment/info/aspen/sunrise/rdeir/figs/fig_2-1_overview_larumorosa_wind_option.pdf.
18Wind Energy Potential in Mexico’s Northern Border States
to link into that line, as it is already running of such an industry would provide
at capacity. thousands of skilled jobs on a permanent
This lack of transmission options basis for workers in the border states, and
is a major obstacle for both domestic would enable equipment and component
and export-oriented projects, but the manufacturers to develop economies of
CRE has recently announced that it will scale and greater levels of efficiency that
attempt to overcome the problem through would enable them to export to the rest of
the launching of an “open season” for North America and beyond.
transmission requests that will spur the State governments must take the lead in
CFE into the construction of new lines. efforts to build the wind energy generation
This approach has worked well in the business in the north. The governments
United States and has already been used of Nuevo León and Tamaulipas highlight
in Oaxaca (and is also being applied in this, but it is Baja California that must be
Tamaulipas). It will, however, only solve considered to be a model for effective policy
the problem of transmission of electricity implementation. There the construction and
for domestic consumption. The problem operation of the La Rumorosa I plant has
of large-scale cross-border transmission shown how wind energy can be exploited in
remains a highly tricky and political such a way as to provide employment and
one, as the bilateral working group on opportunities for local interests, improve
the issue has thus far failed to make any the lives of inhabitants of the community,
significant progress.21 incorporate the local population into the
planning process, and share benefits on
Conclusions and policy an ongoing basis with socially vulnerable
recommendations groups. The potential for knowledge
There can be little doubt that, as with spillovers and the creation of government-
multiple areas of renewable energy, there business-university clusters should also be
is enormous potential for wind energy in examined more closely, as the government
Mexico’s northern border states. Both Baja of Baja California is attempting with the
California and Tamaulipas have begun creation of university-level programs for
to exploit the resource on a large scale, renewable energy.
and Nuevo León has taken the first step However, state governments will not
in this direction by mapping the state’s be able to move the process forward on
wind patterns. The construction, operation their own. Due to the need to build new
and management of wind farms hold transmission capacity to move the newly-
the prospect of significant employment generated electrons to market, the CFE
opportunities for the local population, and and the federal government (through the
land owners (individually or collectively) Secretaría de Energía) will need to engage
will benefit from rents and profit sharing with state governments and the private
schemes. However, the examples of sector. The current move towards open
Chihuahua, Coahuila and Tamaulipas seasons for transmission is a welcome
show that there is also the potential for development, and has worked well in the
building a Mexican wind turbine industry United States and in Oaxaca. Another
to provide equipment and components important lesson to learn from the United
for the coming wind boom in the border States would be for state governments to
region. The building and consolidation work together through the concept of inter-
19RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
state compacts to push CFE to address transmission. Second, governments must
their needs.22 work with local communities to guarantee
Cross-border transmission continues the creation of stakeholders at at the local
to be a major challenge. Although the two level who at the very least will not block
countries have the institutional mechanism projects and at a maximum will lobby
in place to address the problem, there has to make sure that they come to fruition.
been little progress to date in the bilateral Governments must also take full advantage
task force. State governments in Mexico of wind energy in the long-term by both
and the United States should seek ways to building knowledge-based networks and
pressure their federal governments to inject clusters and by attracting wind turbine
new impetus into the process. The elections manufacturers into their territories.
of 2012 provide an intriguing opportunity Mexico’s wind potential is huge. The
for this to happen. northern border states are home to much of
The maximization of benefit from this potential and must develop a strategic
wind energy development in Mexico’s vision of how to best exploit the resource.
northern states can only be achieved if a What is at stake is a long-term payoff in
holistic approach is adopted. First, state terms of employment, investment and social
governments must collaborate with each welfare that is probably more important
other and with the federal government to than the potential impact in terms of
develop a strategy for both generation and climate change mitigation.
20Wind Energy Potential in Mexico’s Northern Border States
About the Authors Omar Romero-Hernandez
Professor Romero-Hernandez spends
Duncan Wood most of his professional time lecturing,
Duncan Wood is professor and director of researching and doing consultancy at
both the International Relations Program Haas School of Business, University of
and the Canadian Studies Program at California, Berkeley. He is a Chemical
the Instituto Tecnológico Autónomo Engineer with graduate studies in
de México (ITAM) in Mexico City. He Economic Policy and Government
leads the Renewable Energy Initiative at and a PhD in Process Economics and
the Wilson Center’s Mexico Institute, Environmental Impact from Imperial
is a member of the Mexican National College, London, UK. Omar has worked
Research System (level 2), a member of for a diverse range of public and private
the editorial board of Foreign Affairs organizations such as Procter & Gamble,
Latinoamérica and has been an editorial PEMEX (Oil & Gas), Accenture, and the
advisor to Reforma newspaper. In 2007, Ministry for the Environment and Natural
he was a non‐resident Fulbright Fellow. Resources. In 2001, he was appointed as
Between 2007 and 2009, he was technical Professor at ITAM, UC Berkeley Fulbright
secretary of the Red Mexicana de Energía, Scholar (2009) and Energy Biosciences
a group of experts in the area of energy Institute Researcher in 2010. He is a
policy in Mexico. He is a Senior Associate National Researcher and author of three
with the Simon Chair at the Center for books: Renewable Energy Technologies and
Strategic and International Studies (CSIS) Policies, Industry and the Environment,
in Washington D.C. His research focuses and Introduction to Engineering —
on Mexican and Latin American energy An Industry perspective and several
policy (including renewable energy), North international publications on engineering,
American relations, banking supervision business and sustainable development. In
and the political economy of international 2010 he was appointed leader of Mexico’s
finance. He studied in the UK and Canada, Business Summit task force on Economic
receiving his PhD in Political Studies from Growth and Low Carbon Emissions, which
Queen’s University, Canada in 1996. delivers recommendations to the President.
Samantha Lozano Medecigo Sergio Romero-Hernandez
Samantha Lozano Medecigo holds a Professor Romero-Hernandez is a full time
Licenciatura in International Relations lecturer and researcher in the Instituto
from the Instituto Tecnológico Autónomo Tecnológico Autónomo de México
de México, in Mexico City. She has also (ITAM). He previously worked for The
studied at the Institut d’Etudes Politiques Turbo Genset Company Ltd as a research
in Aix en Provence, France. She has been and development engineer in charge of
an editorial board member of the ITAM designing efficient cooling systems for high
student International Relations Journal, Urbi speed electrical generators, using CFD
et Orbi. At present she is studying a Master’s techniques. Romero-Hernandez contributed
Degree in the United Kindgdom. chapters to two different textbooks in the
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